In regard to the accounts receivable turnover rate:
A)The higher the better.
B)The lower the better.
C)In some industries it is better higher and in some industries it is better to be lower.
D)The auto industry prefers a lower rate.

Question

Quizplus · Accepted Answer

A higher accounts receivable turnover rate indicates that a company is able to collect its outstanding debts more quickly, which is generally considered a positive sign of efficient operations. A lower rate could indicate that a company is having trouble collecting from customers, which could lead to cash flow problems. Therefore, a higher accounts receivable turnover rate is generally preferable.

In Regard to the Accounts Receivable Turnover Rate